Uncertainty is the Enemy of Investment. Even Large Tech Firms Say So.

Stable Patent System Underpins a Successful Economy

Still more voices are attesting to the instability of patent policy in the U.S., noted Steve Brachman on IPWatchdog.com last week, reporting on the May 8 discussion, “The Impact of Uncertainty and Negative Attitudes Towards IP Rights on U.S. Business,” which was part of an International IP Commercialization Council (IIPCC)-sponsored event in Washington, DC.

For one, Manny Schecter, chief patent counsel for IBM, didn’t mince words in criticizing the U.S. patent system when he was part of a panel that discussed the uncertainty currently felt by its participants. Schecter says that any reduction to the anticipated return caused by uncertainty in IP policy discourages investment in research and development, and that we need to minimize that uncertainty to promote the viability of our economy.

Brachman points out (rightly) that the patent reform debate is usually framed as one that pits the interests of small inventors and startups against those of large technology firms. This is something I also feel passionately about: read my prior posts here, here, and here. The status quo in patent policy hurts the little guys.

Yet Schecter represents IBM, the technology behemoth that has been the top annual US patentee for the last 24 consecutive years. I noted in 2015 that the company has a patent strategy based on quantity over quality, and can use its stacks of patents to drop an iron anvil on the foot of anyone who dares assert a patent against it.

Schecter notes that subject-matter eligibility challenges under Section 101 are “not just hitting bad patents and bad behaviors,” but also the good ones, and “doing so indiscriminately.” He also suggests that the U.S. Supreme Court is making patent policy, but Congress should be taking the reins.

I argued exactly that in an amicus brief I drafted earlier this year on behalf of the American Intellectual Property Law Association (AIPLA) in TC Heartland LLC v Kraft Food Group Brands LLC.

Now we know where the Supreme Court stands. To achieve its May 22 decision in TC Heartland, the Court disregarded two Congressional amendments to the federal venue statute, both of which specified that it covered “all venue provisions,” choosing instead to rely on the Court’s own much earlier decision rendered on a different statute. The result is a one-sided, pro-defendant decision, and a prime example of judicial activism.

I’m increasingly convinced that the U.S. Supreme Court doesn’t understand the purposefulness of patent law, which in itself is a strong enough argument for what prompted establishment of the U.S. Court of Appeals for the Federal Circuit in the first place in 1982. The record of SCOTUS’s misunderstanding of patents is getting longer.

The ruling in TC Heartland only emphasizes the importance of patent laws and rulings that are even-handed and fair to both plaintiffs and defendants, and that encourage investment in our economy by minimizing uncertainty.

Instead of making patent law from the bench, the Supreme Court should have invited Congress to make more nuanced changes that benefit the system as a whole—that is, both plaintiffs and defendants, and innovators large and small. I think even Schecter would agree. And I find that encouraging.

MIMI

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